Rush Street Interactive experienced “the same strong momentum with which we ended December,” according to CEO Richard Schwartz. He said first-quarter numbers set quarterly records “by a wide margin” for revenue and cash flow.
“Said simply, we’re adding players to our platform more quickly,” Schwartz continued. “This is a continuation of what we saw last quarter.”
Among the high metrics was a new record in North American monthly average users, which Rush Street execs said they’d seen accelerate in each of the last six months. Added Schwartz, “This growth across our markets did not come at the expense of value.”
Delaware, in which Rush Street enjoys a monopoly on digital gambling, “continued its strong early performance,” said the CEO. He continued that its run rate of $70 million (projected) for 2024 would be four times that of predecessor 888 Holdings. “Our focus on the icasino experience is resonating with new and existing customers.
“Our customer service is definitely being noticed by the players,” Schwartz resumed. “It’s unclear what that growth will look like going forward,” but Rush Street is investing in Delaware marketing, saying the company is “far beyond where people expected it to be for us.”
As for legislation afoot in Delaware that would end Rush Street’s online sports betting (OSB) monopoly, Schwartz said, “We’re actively involved in discussions … leading us to believe the current structure will remain in place.”
CFO Kyle Sauers chimed in to report, “We continued our trend of positive EBITDA over our fourth consecutive quarter,” with profit margins of 33.7%. He stressed that the company had no debt and that its revenue guidance didn’t include new markets. “We’re very pleased with the impact of our marketing spend. Our current thinking is that it’s going to be up in Q2 and Q3,” accelerating even more in the fourth quarter, driven by sports seasonality.
Overseas, Rush Street saw 78% revenue growth, as well as in its newer North American markets. The company reported an 84% year-over-year revenue increase in Latin America alone, with further growth possible.
Schwartz said he looked forward to a summer launch in Peru, which has two-thirds the population of Rush Street mainstay Colombia and a higher gross domestic product. As for Brazil, regulations are currently being published and the CEO said, “We’re reviewing and assessing them.”
Queried about profitability in Mexico, Schwartz replied, “We’re still a great success in that launch period,” adding that it was ramping up at double the pace of Colombia and already profitable. Not only is Rush Street’s main competitor seeing declining market share, “We have a seasoned marketing team doing a lot of great ads and promotions.”
Regarding the Rush Street balance sheet and possible uses of cash, Sauers noted wryly, “It wasn’t that many quarters ago that you guys were asking if we had enough cash.” He added that the company had sufficient “dry powder” for new markets or potential tuck-in acquisitions.
Schwartz said the company had a couple of big games coming down the pike, remarking, “We’re unique in that we know how to manufacture fun,” as opposed to subleasing it from a supplier. “It’s hard to do, but we think we’ve done it well in the past.”
The company also renewed its relationship with Mike Francesca. The WFAN talk-show host is a brand ambassador for Rush Street.
Question-and-answer time ended with an attempt to draw Schwartz out on a recent Bloomberg report of a possible sale of Rush Street to competitor DraftKings. The CEO was noncommittal. “We’re fully aligned with the shareholders. We’ll continue to evaluate all opportunities.”
When asked why he wasn’t actively pursuing “a strategic alternative,” Schwartz replied simply, “I can’t respond to that question in a public setting.”
